Bank of Israel

The Bank of Israel (Hebrew: בנק ישראל‎ Arabic: بنك إسرائيل‎) is the central bank of Israel. It is located in Kiryat HaMemshala in Jerusalem, with a branch office in Tel Aviv. The current governor is Karnit Flug. She is the first female Governor of the Bank of Israel.

History

When Israel was granted independence in 1948, the power of note issuance was vested with the Anglo-Palestine Bank, which was refounded as Bank Leumi in 1950. Monetary policy and banking supervision remained controlled by the Ministry of Finance.

The Bank of Israel was founded on August 24, 1954, when the Knesset passed the Bank of Israel Act, which ceded the currency issuing and regulatory functions of the Ministry of Finance to the newly formed Bank. Control over foreign currency exchange was not given to the bank until 1978. The Bank was made completely independent in 1985 and since 1992, the Bank manages its monetary policy so as to meet the inflation target set by the Israeli government - which is today a range of between 1 and 3 percent per annum, considered as price stability. Additionally, the Bank manages the Foreign Exchange Reserves.

Israel

Coordinates: 31°N 35°E / 31°N 35°E / 31; 35

Israel (/ˈɪzreɪəl/ or /ˈɪzriːəl/; Hebrew: יִשְׂרָאֵל‎ Yisrā'el; Arabic: إِسْرَائِيل‎ Isrāʼīl), officially the State of Israel (Hebrew: מְדִינַת יִשְׂרָאֵל‎ Medīnat Yisrā'el [mediˈnat jisʁaˈʔel]; Arabic: دولة إِسْرَائِيل‎ Dawlat Isrāʼīl [dawlat ʔisraːˈʔiːl]), is a country in the Middle East, situated at the southeastern shore of the Mediterranean Sea and the northern shore of the Gulf of Aqaba in the Red Sea. It shares land borders with Lebanon to the north, Syria in the northeast, Jordan on the east, the Palestinian territories (which are claimed by the State of Palestine and are partially controlled by Israel) comprising the West Bank and Gaza Strip to the east and west, respectively, and Egypt to the southwest. It contains geographically diverse features within its relatively small area. Israel's financial and technology center is Tel Aviv, while Jerusalem is both its self-designated capital (unrecognised by the United Nations) and its most populous individual city under the country's governmental administration. Israeli sovereignty over Jerusalem is internationally disputed.

Karnit Flug

Karnit Flug (Hebrew: קרנית פלוג; born January 9, 1955) is a Polish-born Israeli economist. She holds the position of Governor of the Central Bank of Israel since November 2013. She is the first female Governor of the Bank of Israel.

Early life

Karnit Flug was born in 1955 in Poland. She immigrated to Israel with her parents at the age of three. Her mother worked in Israel as a pediatrician.

Karnit studied at Hebrew University Secondary School in Jerusalem. She obtained her MA in Economics at Hebrew University of Jerusalem in 1980, and received a Ph.D in Economics at Columbia University in New York City in 1985, with thesis titled "Government policies in a general equilibrium model of international trade and human capital".

She is fluent in Hebrew and Polish and also speaks English and Spanish.

Career

Flug joined the Bank of Israel in 1988 and worked for a few years in the bank's research department. From 1994 to 1996, she worked at the Inter-American Development Bank as a research economist, and returned to the Bank of Israel in 1997. She was appointed deputy governor of the bank in 2011, and served as acting governor since July 2013, following Stanley Fischer's resignation. On October 20, 2013, it was decided to appoint her next governor of the bank, and in November 13, 2013, she was officially assumed office.

Stanley Fischer

Stanley "Stan" Fischer (Hebrew: סטנלי פישר‎; born October 15, 1943) is an economist and the vice chair of the U.S. Federal Reserve System. Born in Northern Rhodesia (now Zambia), he holds dual citizenship in Israel and the United States. He served as governor of the Bank of Israel from 2005 to 2013. He previously served as chief economist at the World Bank. On January 10, 2014, United States President Barack Obama nominated Fischer to be Vice-Chairman of the US Federal Reserve Board of Governors.

Early life and education

Fischer was born into a Jewish family in Mazabuka, Northern Rhodesia (now Zambia). When he was 13, his family moved to Southern Rhodesia (now Zimbabwe), where he became active in the Habonim Zionist youth movement. In 1960, he visited Israel as part of a winter program for youth leaders, and studied Hebrew at kibbutz Ma'agan Michael. He had originally planned to study at the Hebrew University of Jerusalem, but went to the United Kingdom to study after receiving a scholarship from the London School of Economics, and obtained his B.Sc. and M.Sc. in economics from 1962–1966. Fischer then moved to the United States to study at MIT, and earned a Ph.D. in economics in 1969 with a thesis titled Essays on assets and contingent commodities written under the supervision of Franklin M. Fisher. He became an American citizen in 1976.

Bank

A bank is a financial institution that creates credit by lending money to a borrower, thereby creating a corresponding deposit on the bank's balance sheet. Lending activities can be performed either directly or indirectly through capital markets. Due to their importance in the financial system and influence on national economies, banks are highly regulated in most countries. Most nations have institutionalized a system known as fractional reserve banking under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure liquidity, banks are generally subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords.

Banking in its modern sense evolved in the 14th century in the rich cities of Renaissance Italy but in many ways was a continuation of ideas and concepts of credit and lending that had their roots in the ancient world. In the history of banking, a number of banking dynasties — notably, the Medicis, the Fuggers, the Welsers, the Berenbergs and the Rothschilds — have played a central role over many centuries. The oldest existing retail bank is Monte dei Paschi di Siena, while the oldest existing merchant bank is Berenberg Bank.